Contract analysis

I. Purpose and Executive Summary The purpose of this memorandum is to inform the ongoing negotiation of the indemnification provisions in the Master Clinical Trial Agreement ("MCTA") between Penterra Pharmaceuticals Corp. ("Penterra" or "Sponsor") and Veridian Health Research Network, Inc. ("Veridian" or "Site Network") for Protocol PPC-4871-III — the Phase III, randomized, double-blind, placebo-controlled trial of p

II. Methodology A. Data Sources and Scope This memorandum is based on a detailed review of indemnification provisions from a sample of twelve (12) comparable multi-site Phase III clinical trial agreements — including both master clinical trial agreements ("MCTAs") and master site-network agreements — executed between 2019 and 2023 by peer pharmaceutical sponsors in the oncology, hepatology, and specialty pharmaceutic

1. Scope of sponsor indemnification of sites and investigators — including the categories of claims, losses, and liabilities covered, and the classes of indemnified parties (institutions, principal investigators, sub-investigators, study coordinators, and other site personnel).

2. Subject-injury medical care cost provisions — including both per-subject caps and aggregate caps on the sponsor's direct obligation to cover medical care costs arising from study-related injuries, as distinguished from third-party indemnification for litigation claims.

3. Carve-outs and exclusions from sponsor indemnity — including exclusions for site negligence, unauthorized protocol deviations, breach of agreement, and breach of applicable law.

4. Reciprocal site/investigator indemnification of sponsor — including scope, triggering events, and the classes of claims covered by the site's or investigator's indemnity running to the sponsor.

5. Caps on reciprocal site indemnity — including per-site/per-occurrence caps and aggregate caps across all sites in the network.

6. Notice requirements — including the time period for notice of claims and the consequences of failure to provide timely notice.

7. Defense and settlement procedures — including allocation of the right to control the defense of indemnified claims and the procedures governing settlement authority.

8. Insurance requirements supporting indemnification — including minimum per-occurrence and aggregate policy limits for both sponsors and sites, additional insured endorsements, and certificate-of-insurance exchange requirements.

9. Interaction between indemnification and limitation-of-liability provisions — including the carve-out of indemnification obligations from general limitations on liability. Each of these parameters was analyzed on a provision-by-provision basis across the 12 agreements, and the results are reported in the sections that follow.

III. Sponsor Indemnification of Sites and Investigators — Market Analysis A. Scope of Sponsor Indemnity Obligations The scope of the sponsor's indemnification obligation to clinical trial sites and investigators is the foundational provision of any MCTA indemnification structure. Across all twelve (12) agreements reviewed, sponsors provided broad indemnification covering the site institutions, principal investigators

IV. Carve-Outs and Exclusions from Sponsor Indemnity — Market Analysis A. Standard Carve-Outs No indemnification obligation is absolute, and the appropriate delineation of carve-outs and exclusions from the sponsor's indemnity is essential to achieving a balanced risk allocation. Across all twelve (12) agreements reviewed, the following carve-outs from sponsor indemnification were present without exception: (i) Negli

V. Reciprocal Site/Investigator Indemnification of Sponsor — Market Analysis A. Scope of Site Indemnity All twelve (12) agreements reviewed included reciprocal indemnification provisions running from the site network and/or the individual site institutions to the sponsor. Under these provisions, the site network and/or institutions indemnify the sponsor and its directors, officers, employees, and agents against claim

VI. Comparative Summary Table The following table presents a structured comparison of Penterra's proposed indemnification terms against the market range, median, and most common position across the twelve (12) benchmarked agreements: As reflected in the table, Penterra's proposed indemnification terms are at or near the market median on every measured parameter. The aggregate medical care cost cap of $15,000,000 is m

VII. Analysis of Key Negotiation Dynamics A. Anticipated Veridian Positions Based on prior representations involving large academic site networks and 501(c)(3) research organizations, and based on our familiarity with the negotiation approach of Whitmore, Jansen & Callahan LLP (lead partner Allison Whitmore), we anticipate that Veridian may seek the following modifications to Penterra's proposed indemnification struc

1. Uncapped sponsor indemnification for all subject injuries. Veridian is likely to push for the removal of both the $500,000 per-subject medical care cost cap and the $15,000,000 aggregate medical care cost cap, seeking uncapped sponsor indemnification for all study-related subject injuries — not just product-defect claims. This is the most site-favorable position and is consistent with the negotiating posture of ac

2. Higher sponsor insurance requirements. Veridian may seek to increase the minimum sponsor insurance requirement to $50,000,000 per occurrence, above the $25,000,000 per-occurrence limit in Penterra's current Briarcliff policy. This demand is often paired with the request for uncapped indemnification, as higher insurance limits provide the financial backstop that makes uncapped indemnification commercially feasible

3. Narrower carve-outs from sponsor indemnity. Veridian is likely to seek narrower carve-outs from sponsor indemnity, particularly with respect to protocol deviations. As discussed in Section IV.B, we anticipate that WJC will argue for a broader medical necessity exception — potentially extending to any deviation made in the investigator's "reasonable clinical judgment" — and may also seek to limit the scope of the n

4. Lower site indemnity caps. Veridian may seek to reduce the per-site/per-occurrence cap from $5,000,000 to $2,000,000 or $3,000,000, and to reduce the aggregate cap from $20,000,000 to $10,000,000 or $12,000,000. This is a predictable position for a 501(c)(3) organization concerned about the potential financial impact of indemnification obligations on its tax-exempt mission.

5. Broader definition of "study-related injury." Veridian may seek to expand the definition of "study-related injury" — the triggering event for the sponsor's medical care cost obligation — to encompass injuries arising from study procedures (such as biopsies, imaging procedures, blood draws, and other protocol-mandated interventions) and not just injuries arising directly from the administration of the investigation

1. Maintain the per-subject cap ($500,000) and aggregate cap ($15,000,000) for medical care costs. The benchmarking data demonstrates that these caps are at or above the market median for comparable Phase III oncology trials. In negotiations, Penterra should present the benchmarking analysis to demonstrate that its proposed caps are not only commercially reasonable but are, in fact, moderately more generous than the

2. Maintain uncapped product-defect indemnification as a concession. The uncapped product-defect indemnification is consistent with the market standard (10 of 12 agreements) and represents Penterra's most significant concession on the indemnification structure. In negotiations, Penterra should frame this provision as demonstrating its willingness to bear full responsibility for risks within its control — i.e., defect

3. Resist demands for uncapped subject-injury indemnification broadly. As noted above, only one of twelve peer agreements provided fully uncapped medical care cost coverage. Uncapped coverage would expose Penterra to potentially unlimited liability for medical care costs in a 1,200-subject trial, which — while theoretically unlikely to be consumed in full — would create an unquantifiable contingent liability on Pente

4. Resist the insurance increase to $50,000,000 per occurrence. Penterra's Briarcliff policy provides $25,000,000 per-occurrence coverage, which is at the market median. Increasing the per-occurrence limit to $50,000,000 would impose significant additional premium costs on Penterra, which we understand from preliminary discussions with Briarcliff could amount to approximately $1.2 million to $1.8 million in additiona

5. Maintain site indemnity caps at $5,000,000 per site/per occurrence and $20,000,000 aggregate. These caps are at the market median and mode and are appropriate for a site network of Veridian's size and financial profile. However, if Veridian pushes for a reduction and the negotiation requires a concession on this point, Penterra should be prepared to accept a modest downward adjustment — for example, to $4,000,000

6. Include the medical necessity exception for protocol deviations. As discussed in Section IV.B, the medical necessity exception is consistent with the majority market position (9 of 12 agreements) and is critical for physician-investigators at Veridian Network academic centers. Proposing this exception in the first draft MCTA will signal Penterra's reasonableness and may preempt a contentious negotiation on this po

VIII. Special Considerations for the CLARION Trial A. Risk Profile of Penterafenib (PPC-4871) The appropriate level of indemnification coverage should be informed by the specific risk profile of the investigational product. Penterafenib (PPC-4871) is an oral multi-kinase inhibitor being developed for the treatment of advanced hepatocellular carcinoma ("HCC") in patients who have progressed on or are intolerant to fir

IX. Recommendations and Conclusion Based on the benchmarking analysis set forth in this memorandum, we reach the following conclusions and recommendations:

1. Penterra's proposed indemnification structure is well within market norms and appropriately balances sponsor and site interests for a multi-site Phase III oncology trial of the scale and risk profile of the CLARION trial. On every measured parameter, Penterra's proposed terms are at or near the market median, and the proposed aggregate medical care cost cap of $15,000,000 is modestly above the market median — a fe

2. We recommend proceeding with the proposed terms in the first draft MCTA to be circulated to Whitmore, Jansen & Callahan LLP on or about April 7, 2023. The proposed terms represent a commercially reasonable starting position that should be well-received by sophisticated counterparty counsel and that provides Penterra with adequate room for negotiation on the anticipated areas of contention.

3. We recommend using the benchmarking data and analysis in this memorandum to support Penterra's positions in negotiations with Veridian and WJC, particularly if the counterparty pushes for: (a) Uncapped subject-injury indemnification (supported by only 1 of 12 peer agreements); (b) Higher sponsor insurance requirements (the $25,000,000 per-occurrence limit is at the market median); (c) Lower site indemnity caps (th

4. This analysis should be read in conjunction with two companion memoranda: (a) The Memorandum on Subject-Injury Indemnification Standards in Phase III Trials, which provides a deeper legal analysis of the enforceability and regulatory context of subject-injury indemnification provisions; and (b) The Insurance Requirements Analysis Memorandum, which provides a detailed analysis of the adequacy of Penterra's Briarcli

5. We are prepared to provide supplemental analysis or updated benchmarking if additional comparable agreements become available through the firm's precedent database, or if the dynamics of the negotiation with Veridian and WJC require an adjustment to Penterra's proposed terms. In particular, if Veridian presents counterproposals supported by their own benchmarking data, we can prepare a point-by-point rebuttal anal

6. We are available to discuss this memorandum and the recommended negotiation strategy at the team's convenience. We respectfully request feedback from Miriam Calloway and Rebecca Liang on the proposed approach, and we welcome any additional guidance on Penterra's negotiation priorities and red lines as we finalize the first draft MCTA. Please do not hesitate to contact Christopher Aiken at (212) 555-4719 or caiken@